The Corporation and the Little Guy in the 11th Circuit

September 16, 2013
posted by Bob Bauer

The Campaign Legal Center has alerted its readers to a “flood” of challenges to campaign finance laws, and its message is that the reform advocates must remain at their battle stations. It is certainly true that interests hostile to any campaign finance regulation are hard at work; they might well believe that in this time, with this Supreme Court, their moment has come and no time should be wasted. But not all of these challenges are fairly lumped together and described as one indiscriminate assault against any and all reasonable regulation. A few raise questions that even those favoring reasonable limits on campaign finance should take—and address—seriously.

The case of Worley v. Fla. Sec’y of State, 717 F.3d 1238 (11th Cir. 2013), is one such case, a challenge to an application of a state requirement that individuals supporting or opposing a ballot initiative must register and report through a political action committee (PAC). The Eleventh Circuit rejected the claim, which is now before the Supreme Court on a petition for certiorari. The four petitioners in Worley argue that PAC requirements, if a burden on corporations in the manner described by the Supreme Court in Citizens United, must fall even more heavily and just as permissibly on individuals banded together in limited, inexpensive “grassroots” political enterprises. In 2010, the petitioners had launched a project to finance $600 in radio ads opposing a state constitutional amendment, and while they do not deny the state’s authority to promulgate properly tailored disclosure requirements, they do protest a requirement that they bear all the registration, organizational and record-keeping requirements of a PAC. Petition for Writ of Certiorari at 24, Worley v. Fla. Sec’y of State, 717 F.3d 1238 (11th Cir. 2013) (arguing against imposition of PAC requirement, not “some appropriately tailored form of disclosure”).

We are back here to the recurring question of whether the campaign finance doctrine has have taken a perverse turn, providing an increasingly manageable regulatory environment for corporations and the well-heeled while complicating, in expense and regulatory risk, the conduct of lower cost, smaller-scale activities that individuals organize and finance to advance a common goal. The question, in short, of the “big guy” v. the “little guy.” The Eleventh Circuit decision appealed by the Worley plaintiffs shows how, particularly after Citizens United, a court can display mostly indifference to the problem and leave doctrine the worse for it.

The Circuit Court declined to put stock in the scale of the $600 radio campaign the petitioners had planned to finance. At oral argument, the petitioners were asked whether they would accept a $1 million contribution if offered at some point in the future, and counsel, reasonably, said, well sure—though none had been offered in the past and nothing close to this amount was involved in the activity before the court. On this basis, the court concluded that no account could be taken of the small scale of the radio program: all this could change, and what had been small in the past could be so much larger in the future. Worley v. Fla. Sec’y of State, 717 F.3d 1238 at 1251 (Petitioners on questioning would not “foreclose their options for raising big money”). For this reason, the Court proceeded to consider the claim on facial, not as-applied, basis, sloughing off into a footnote its concern with “truly small” grassroots organizations. Id. at 1253 n.8.

On this dubious reading, all or most grassroots activity could conceivably, maybe, grow by leaps and bounds such that ad hoc, issue-specific associations are usually prospects to become second-generation versions of American Crossroads. The Court’s resistance to the petitioners’ position does not end there. It also suggests that even if the petitioner had answered the question differently, even if the four individuals had resolutely committed to reject any contribution over $200 or $500, the problem they faced in challenging the PAC requirement was in part doctrinal in nature. Here the Court distinguishes the situation of the corporation in Citizens United: it suggests the corporation was in that case justified in complaining about the burdens of PACs when, barred from making direct expenditures, the PAC was its only alternative. The Worley petitioners are comparatively better off, the Court tried to explain:

In contrast with the operation in Citizens United, Challengers are free to speak themselves. It is only when they wish to speak collectively to influence elections that the Florida PAC regulations apply.

Id. at 1244. The corporation could not be confined to “speaking through a PAC or through its individual shareholders or managers.” Id. A PAC is no such limitation on the speech of the Worley quartet.

What the Court misses, or dismisses, is the significance of the means by which these individuals wish to be heard, and believe they will be heard most effectively: as a group, in association with one another. It is true that unlike the corporation before Citizens United, each of the individuals in the “Worley Four” could speak freely as individuals, each making independent expenditures and skipping the PAC requirement altogether. But as the Court reads their options, the petitioners in Worley had this choice: break off from one another and spend $150 apiece, or associate with their colleagues and spend $600. It would seem that the regulatory pressures on this choice should carry considerable weight in the constitutional analysis.

The contrast drawn by the Court fails even on its own terms. Prior to Citizens United, the PAC was not the only alternative for the corporation unable to make independent expenditures. As the Court notes in passing, individuals within the corporate community, shareholders and executives could speak as individuals, on behalf of the corporation, spending however much they want. Citizens United also empowered them to speak through their own organization, the corporation. But Worley and his colleagues cannot speak as a group, except if they organize by law as a PAC. Corporations have to report each of their expenditures, but that is all: they don’t become a PAC by virtue of their spending, and they don’t have to organize one.

One reply to these differences might be that the individuals acting together have a “major” purpose of influencing elections that the corporation does not. This is one of the points at which the distinctions deservedly drawn between big and little guys break down and the doctrine in application can wander off into a questionable direction. Under this major purpose theory, the corporation can spend major amounts of money, perhaps in the millions, with minor regulatory burdens, namely, reporting requirements that attach to each expenditure. Meanwhile individuals associating for political purposes can spend minor sums and take on the more significant regulatory burdens of organizing as a PAC. Something here is amiss. This application of the major purpose theory serves to block consideration of the level of regulatory complexity and expense that those involved in grassroots activity should be expected to bear.

Two other issues addressed by the Court add to the sense that the Worley petitioners have an understandable grievance that doctrine is skewed against them. The Court makes light of what it means for them to organize a PAC and subject themselves top the state’s regulatory supervision. After all, the Court asserts, the law in imposing record-keeping requirements is merely requiring them to do what they would do anyway as responsible stewards of their money. Id. at 1250. A remarkable assertion, which can be restated this way: whatever might be a responsible thing to do is what the law can properly compel you to do.

And then the Court brushes aside the additional concern that once the Worley group have become a regulated political committee, they are required to report every cent collected. There is no minimum reporting threshold. Contrast this with the expenditure thresholds established under federal law for corporations financing “electioneering communications” ($10,000) or independent expenditures ($250). The Court nonetheless posits that small donations in the aggregate tell a story the public should know “about the breadth of support for a group or a cause.” Id. at 1251. Such disclosure is somehow “informative in the aggregate.” Id.

And if this affirmative ground of disclosure is not persuasive, the Court offers one that is defensive: preventing the “evasion of disclosure” that would occur if large donors outwitted the law by “making a number of small donations.” Id. Does the Court have in mind that a big donor would move a million dollars $10 at a time? It does not elaborate, but it is hard to escape the impression that the Court is reciting bits of doctrine retrieved from contexts and cases where they might make more sense than they do here.

To find fault with the Worley analysis, and to worry that it reflects poorly on contemporary campaign finance doctrine, does not align the critic with admirers of Citizens United or proponents of a completely deregulated politics. Agreement across the ideological divide should be possible on some points, one of which might be that regulatory obligations and expense should vary with the scale and nature of the political activity. Edmund Corsi is pressing this point; and now, too, Worley and friends. And Worley is putting front and center the question of why corporations should have a freer hand and lighter regulatory burden than individuals banding informally together at modest cost to advance a common political purpose.

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